Value Bomb: Impound Account
If you’ve heard the term “impound account” and you’re curious what it means, it’s simply an account that’s put together by your mortgage service provider, and they collect money from you for things like your property taxes or home owner’s insurance. It essentially wraps it in to the mortgage payment even though it’s not a part of the mortgage payment.
It benefits the lender in that they know their asset, the home is properly insured and that taxes are being paid, and it benefits the home owner in that they don’t necessarily have to worry about large looming payments coming due.
Some people opt not to get impound accounts because they want complete control over their money as it leads up to those deadlines, and they’re not worried about budgeting for it, but it’s really just a matter of personal preference at the end of the day.